Uranium project faces more issues

A major project aimed at maintaining the nation’s ability to enrich its own uranium may soon find itself in another cash crunch.

USEC, the company behind the American Centrifuge Project, said Tuesday that it will enter a period of fiscal uncertainty after the end of the year, when it’s scheduled to finish a cost-share agreement with the Energy Department aimed at demonstrating the project’s technology.

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The company plans to reapply for a $2 billion loan guarantee from the agency as early as December, but that will leave a gap when USEC may not have the money to keep working on the Ohio project while DOE studies the application.

“In light of our liquidity, we do not have the ability to continue to fund ACP at its current levels beyond the end of 2013 without additional government support,” USEC President and CEO John Welch said Tuesday on a call with investors. “Even with their support, our ability to provide funding in 2014 will be limited.”

He said the company “could make a decision to demobilize or terminate the project in the near term.”

The project has so far been on schedule and met six of the nine technical milestones DOE set for the project. Completion of the final three milestones is expected by the end of December.

In a financial statement for the third quarter, USEC said the company “does not currently have any financing in place for the project following completion of the [research, development and deployment] program in December 2013.” It also more clearly states that some kind of funding will be needed to keep the ACP going until longer-term financing is secured: “We anticipate that funding will be needed for the project for the period from completion of the RD&D program until the receipt of financing for commercial deployment.”

Several factors have kept the company and its project running from crisis to crisis over the past two years, including the deflated price of re-enriched uranium, USEC’s main product.

“From a technical standpoint, we are making excellent progress in demonstrating the American Centrifuge technology,” Welch said Tuesday. “Unfortunately, as we have reported throughout 2013, market dynamics for our nuclear fuel product are presenting a significant challenge for commercialization of the American Centrifuge Project.”

The price of re-enriched uranium has fallen with lower nuclear fuel demand since the 2011 earthquake off the coast of Japan and its decision to keep nearly all of its nuclear reactors offline. Reactor shutdowns in Germany and the U.S. also have depressed enriched uranium prices, which Welch said are at the lowest point in a decade.

Welch said the market for enriched uranium is “oversupplied” in the short term and that USEC is in “ongoing discussions” with the federal government about the potential gap in the company’s ability to support the project.

As part of the 2012 cost-share agreement, USEC and the Energy Department are slated to spend $320 million on the project in total, $30 million less than expected, the company said.